NCLT admits insolvency resolution plea of Catalyst Trusteeship against Renaissance Indus Infra

NCLT admits insolvency resolution plea of Catalyst Trusteeship against Renaissance Indus Infra

The lender took the step after the company defaulted on its instalments of Rs.444 crore

The National Company Law Tribunal (NCLT) has admitted real estate and construction firm Renaissance Indus Infra into the Company Insolvency Resolution Process (CIRP) following a guilty plea by its financial creditor Catalyst Trusteeship.

The Mumbai Court bench appointed Birendra Kumar Agarwal as an Insolvency Resolution Professional (IRP) to carry out the function under the Insolvency and Bankruptcy Code (IBC), 2016.

Renaissance Group, through its RUIPL special purpose vehicle (SPV) project, and Renaissance India had initially secured funding from Edelweiss Financial Services. Under the debt term sheet signed in 2018, the company proposed to refinance the outstanding amount with Edelweiss and also obtain additional financing for project development expenses.

As per the debt term sheet executed between Altico Capital India and the company, Altico agreed to write non-convertible debentures amounting to Rs.390 crore and an amount of Rs.280 crore was disbursed.

In June 2018, a deed of trust was executed between the company as issuer and Vista ITCL India as trustee of debentures. In March 2021, as holder of the debentures, Altico transferred its rights along with the underlying collateral and the rights created by Renaissance Group and the other obligations in favour of the financial creditor.

Appearing on behalf of the lender, Nishit Dhruva, the managing partner of law firm MDP & Partners argued that the company began defaulting on its instalments in March 2021 and every quarter thereafter. Thus, the company defaulted on Rs.443.81 crore by June 2022.

While acknowledging its liability, Renaissance Indus expressed financial difficulties in paying the outstanding amount.

Thus, the bench comprising Kuldip Kumar Kareer (judicial member) and Anuradha Sanjay Bhatia (technical member) said that according to the Renaissance Group, the petition could be dismissed since such a declaration could only be filed by the trustee of the obligation or the financial creditor together with the trustee. The financial creditor alone was not entitled to file such an exception.

However, the court dismissed the argument and stated that the financial creditor was an original assignee under the 2021 assignment agreement. It was competent to file the petition.

The company argued that the financial creditor had no place to file the petition under the terms of the Intercreditor Agreement signed in 2018 that the financial creditor knowingly withheld when filing the plea.

However, the Court maintained that the claim raised by the company had no consequences.

The tribunal noted that the 2018 Intercreditor Agreement established that the financial parties intended to refer collectively to the deed of trust, the deed holders and any agents of the deed trustee. Therefore, legal proceedings could be initiated by them.